Emery Kast, PLLC strives to be a different kind of law firm. We are attorneys who understand that experiencing financial problems or going through a divorce or its aftermath are some of the most stressful times in people’s lives. At Emery Kast, PLLC, “Helping Good People In Bad Times” is our Mission Statement. We are committed to helping people protect their rights and assets through quality, affordable legal representation.
At Emery Kast, PLLC, we believe it’s time for a different kind of law firm. We understand that excellent legal representation has nothing to do with the size of our building or a large staff. We know large firms because we have worked for them. We are a different kind of law firm. And we know a better way.
We are committed to providing a warm, welcoming environment, not cold, marble floors and pretentious airs. We are proud of the personal relationships we have with our clients. We understand that you want to know your attorney personally and we are interested in knowing you. We have been where you are. We know life’s struggles aren’t easy and are here to help. If personal service is important to you, it’s time you got to know the better way with a different kind of law firm.
We can help you navigate the treacherous and confusing tangle of bankruptcy, foreclosure court and family law rules that keep you from living your best life now. We offer affordable payment plans. Emery Kast, PLLC can help you deal effectively with creditor harassment, overwhelming debt and the heartbreak and stress associated with divorce, child custody, alimony, child support and paternity issues.
It’s time for a different kind of law firm.
It’s time for Emery Kast, PLLC.
We can help you navigate the treacherous and confusing tangle of bankruptcy and family law rules that keep you from living your best life now. We offer affordable payment plans. Emery Kast, PLLC can help you deal effectively with
· Foreclosure Solutions
· Family Law Matters
· Creditor Harassment
· Loan Modifications
· Tax Debt Negotiation and Settlement
Foreclosure of a home is something which every homeowner wants to avoid. No one wants to lose their home. However, life doesn’t always give us what we want and circumstances beyond your control may have you facing a foreclosure.
The foreclosure process is never easy. Facing foreclosure can leave people feeling lost, ashamed and overwhelmed. It does not have to be this difficult. Emery Kast, PLLC can provide you with alternatives to foreclosure and help save your home while giving you the support you need to cope with the foreclosure process.
Many of our clients mistakenly believe that there is nothing they can do to stop their foreclosure. However, after speaking with an attorney at Emery Kast, PLLC they discover that there are viable alternatives to foreclosure.
You have alternatives to consider. Your options vary depending on whether you wish to keep your home or are interested in selling the property and keeping the foreclosure off your credit report. Depending on the case, there are different options:
Emery Kast, PLLC can assist you in exploring your potential alternatives to foreclosure in order to make the choice that is best for your financial goals now and in the future. Contact us today online or at (904) 404-3394 to schedule your free consultation.
If you are facing foreclosure, call us today. We can provide you with options for your situation.
Q: What is bankruptcy?
A: Bankruptcy is a legal process which allows a person (a “Debtor”), who owes more money than he or she can currently repay, to either (1) repay a portion of the money over time under Chapter 11, 12, or 13, or (2) have the entire debt forgiven (“discharged”) under chapter 7. Under chapter 7, a Debtor may be required to surrender assets to a trustee. Bankruptcy is also available to businesses, corporations, and partnerships. Even municipal governments can file bankruptcy (under Chapter 9).
After a Debtor has filed a case (i.e., “petition”), creditors must stop all collection efforts against the Debtor for a period of time, unless they get permission from the bankruptcy court to continue. This protection from collection efforts is referred to as the “automatic stay.” The Bankruptcy Code and Federal Rules of Bankruptcy Procedure determine which chapter one is eligible to file, which debts can be eliminated, how long repayment must continue, which possessions can be kept, etc. A Debtor must abide by these federal laws and rules.
Q: What chapter is right for me?
A: Your decision whether to file bankruptcy and under which chapter to file depends on your particular circumstances. In general, Chapter 7 is appropriate when the Debtor has insufficient income to pay a portion of his/her debts, and the Debtor is not seeking to keep non-exempt property. Otherwise, if the Debtor has an income or property and can afford to repay at least some of his/her debts, Chapter 11, 12 or 13 may be appropriate, depending on whether the Debtor is an individual, partnership, corporation, or family farmer. The decision whether to file a bankruptcy case and under which chapter is an extremely important decision and has tremendous financial impact. You should contact Emery Kast, PLLC for a free consultation to get qualified legal advice customized to your situation.
Q: What is the difference between a chapter 7, 13 and 11?
A: Chapter 7 – In a Chapter 7, Debtors are permitted to retain certain “exempt” property, while the remaining assets are liquidated by the trustee. The trustee will distribute the funds from the liquidation to holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code. Accordingly, potential Debtors should realize that the filing of a petition under chapter 7 might result in the loss of non-exempt property. It is important that you contact Emery Kast, PLLC or a bankruptcy attorney of your choosing prior to filing to determine what exemptions you are entitled to and how to best protect your assets.
Chapter 13 – Chapter 13 is designed for individuals with regular income to repay a portion or all of their debt over an extended period of time. Chapter 13 may be appropriate for Debtors who seek to retain certain assets through a repayment plan.
Chapter 11 – Chapter 11 allows corporations, partnerships, and certain individuals who do not qualify under Chapter 13, to reorganize without having to liquidate all assets. As in a Chapter 13, the Debtor (called the “debtor-in-possession” because a trustee is not normally assigned) is required to present a repayment plan. If the plan is accepted by the creditors and subsequently approved (“confirmed”) by the Court, this allows the Debtor to reorganize his/her/or its personal, financial, or business affairs.
Q: What happens when a bankruptcy petition is filed?
A: The commencement of a bankruptcy case creates an “estate.” The estate technically becomes the temporary legal owner of all of the Debtor’s property. The estate consists of all legal or equitable interests of the Debtor in property as of the date the case is filed, including property owned or held by another person if the Debtor has an interest in the property. Section 362 of the Bankruptcy Code governs the applicability of the "automatic stay" to the facts and circumstances of your bankruptcy case. If it applies, it prohibits creditors from taking collection action against the Debtor or the Debtor’s property without Bankruptcy Court approval. The Court issues a notice of commencement advising all interested parties of the filing of the bankruptcy case. This notice provides the case number, trustee, date of the meeting of creditors, deadline to file a proof of claim (if applicable), and deadline to file an objection to the discharge (if applicable).
Q: Do I need an attorney to represent me in my bankruptcy case?
A: Each Debtor filing an individual bankruptcy has a right to represent him or herself (Pro Se Debtor); however, the use of an attorney is recommended. Ignorance of the law may cost an individual far more than an attorney’s fee. By law, a Corporation is required to have an attorney.
Q: What is credit counseling?
A: Prior to filing your bankruptcy case, a Debtor must complete and obtain a certificate from an approved non-profit credit counseling agency during the 180-day period preceding the date of filing. Debtors are also required to complete a post-filing education course after they file.
Q: How is a debt classified as secured, unsecured, priority, or administrative?
A: A secured debt is a debt that is collateralized by property. A creditor whose debt is “secured” has a right to foreclose or take property to satisfy a “secured debt.” For example, a mortgage loan is likely “secured” by a Debtor’s home. This means that the lender has the right to foreclose upon and take the home if the Debtor fails to make the loan payments.
An unsecured debt arises when you promise to repay someone a sum of money at a particular time, but you have not pledged any property as collateral for the debt.
A priority debt is a debt entitled to priority in payment, ahead of other debts such as alimony or child support payments.
An administrative debt is a category of priority debt. Generally, it is created when someone provides goods or services to your bankruptcy estate after you file your petition. An example of an administrative debt is the fee charged by an attorney or other authorized professional for services rendered after the bankruptcy case has been filed.
Q: What is a bankruptcy discharge?
A: A bankruptcy discharge releases the Debtor from personal liability for discharged debts. Thus, it prevents the creditors owed those debts from taking any action against the Debtor to collect the debts. Most, but not all, types of debts are discharged if they existed on the date the bankruptcy case was filed and were listed on the schedules.
There are generally three (3) major categories of debts: (1) secured; (2) priority; (3), unsecured.
Secured Debts. In general, secured debts (such as your mortgage or automobile loan) must be paid or the property must be returned. These debts are “secured” by the real or personal property.
Priority Debts. There are certain types of debts that are considered “priority debts” which are given special treatment under the law and are not dischargeable in bankruptcy. These include, but are not limited to, child support, alimony, and IRS debt. If your creditors receive any money from the administration of your bankruptcy estate, these types of debts get paid first. If there are any funds left over then your remaining creditors will get paid their share.
Unsecured Debts. Unsecured debts include credit cards, hospital bills, utility bills, and unsecured personal loans. These debts are completely discharged or eliminated in a chapter 7 case and are paid a percentage in a chapter 13 case on certain occasions.
Bankruptcy law regarding the scope of a discharge is complex, and Debtors should consult with the attorneys at Emery Kast, PLLC prior to filing.
Q: What debts are dischargeable?
Congress has identified certain debts that cannot be discharged in a bankruptcy for any reason. Many debts that would ordinarily qualify for discharge may be determined as non-dischargeable if a Debtor has committed a crime or fraud in acquiring the Debt.
The following are generally non-dischargeable debts:
Generally, all debts listed on the petition are dischargeable. However, certain types of debt listed in 11 U.S.C. §523 are not dischargeable. The non-dischargeable debts listed in §523 include, but are not limited to:
a. Certain taxes and fines;
b. Debts arising from certain fraudulent conduct;
c. Debts not listed in your bankruptcy petition;
d. Alimony, child maintenance or support, and certain other related debts arising out of a divorce decree or separation agreement;
e. Debts caused by the Debtor’s willful and malicious injury to another;
f. Government guaranteed student loans;
g. Debts caused by a death or personal injury related to your operation of a motor vehicle while intoxicated; and
h. Post-bankruptcy condominium or cooperative owner’s association fees.
This list includes only examples of non-dischargeable debts. There are exceptions to these rules and each situation has its own challenges. Emery Kast, PLLC can help. We can review your situation and determine which debts can be discharged through bankruptcy.
Q: When do I receive a discharge of my debts?
A: The Notice of the Section §341 Meeting of Creditors reflects a date by which all complaints objecting to discharge or dischargability of debts must be filed. If the debtor has complied with all of the filing requirements, paid the filing fee in full and pursuant to section 727(a) (10) completed an instructional course concerning personal financial management, and has filed the proper certification reflecting completion, your discharge will be entered in due course after the expiration of the date stated earlier.
Q: Can a discharge be denied?
A: Under certain circumstances, the Bankruptcy Code provides the Debtor’s discharge may be denied in a chapter 7 case. Grounds for denial exist when the Debtor: (1) failed to keep or produce adequate books or financial records, (2) failed to satisfactorily explain any loss of assets, (3) committed a bankruptcy crime such as perjury, (4) failed to obey a lawful order of the bankruptcy court, or (5) fraudulently transferred, concealed, or destroyed property that would have become property of the estate.
Q: What is the role of a Trustee assigned in a chapter 7 or 13 case?
A: Under Chapter 7, an impartial trustee is appointed to administer the case by collecting and liquidating the Debtor’s non-exempt assets in a manner that maximizes the return to the Debtor’s unsecured creditors. It’s really the Trustee’s job to make sure creditors get as much money as possible.
Under Chapter 13, an impartial trustee is also appointed to administer the case. The primary roles of the chapter 13 trustee are to determine the feasibility of a Debtor’s repayment plan for the court and to serve as a disbursing agent, collecting payments from Debtors and making distributions to creditors.
The Trustee’s job is to:
· Administer the bankruptcy
· Make sure creditors get as much money as possible
· Run the first meeting of creditors (also called the "section 341 meeting").
· Collect and sell non-exempt property (in a chapter 7 case) or collect and pay out money on a repayment plan (in a chapter 13 case)
· Obtain information from you and documents related to your bankruptcy
· Trustees are appointed by the bankruptcy court, but aren't necessarily lawyers. Their fees are covered by the bankruptcy filing fee or are a set percentage of the money distributed in the bankruptcy.
Q: Will the Trustee come to my house?
A: In most cases, no one will come to your home to examine your personal belongings unless there is a suspicion that you have hidden assets or undervalued what you own. This is very rare.
Q: What is a 341 meeting?
A: This meeting is referred to as the “meeting of creditors.” All creditors are notified so that they may attend, but their attendance is not required. Debtors have a duty to appear and testify under oath and answer questions by creditors. This meeting is presided over by the trustee assigned to the case and is held approximately 45 days after the petition is filed. Debtors are required to provide photo identification and proof of social security number to the assigned trustee. A Debtor’s failure to appear may result in dismissal of the case. If a continuance or change in the hearing date is sought, the trustee assigned to the case must be contacted.
Q: What happens at a 341 meeting of creditors?
A: Once you declare bankruptcy you must attend the creditors' meeting conducted by the trustee appointed to their case. You must answer questions concerning:
· How the situation evolved
· Any actions taken with the property
· Debts listed in the petition or any other financial information requested by the trustee
· Failure answer truthfully can result in the petition being dismissed or, in extreme cases, a charge of perjury. Creditors may attend and question you about the assets or any other matter relevant to the bankruptcy. A creditor doesn't waive any rights by not attending the creditors' meeting.
Q: If I file for bankruptcy, will it stop an eviction?
A: The answer depends on the status of the eviction process at the time of the bankruptcy filing. If the landlord has not obtained a state court judgment entitling the landlord to possession of the property and the removal of the Debtor, then the bankruptcy will stay the eviction proceeding. If the state court has issued a judgment of possession the bankruptcy will not stop the eviction, but there are several exceptions. For example, the bankruptcy tenant can stay the eviction for 30 days if he or she has a right to cure the lease default under state law or he or she deposits in the court registry the amount of rent which will become due during the 30 day stay.
Even if the law permits the landlord to evict the Debtor, the bankruptcy stay will prevent the landlord from executing remedies other than the eviction to collect past due rent.
Q: How long does a bankruptcy filing remain on my credit report?
A: A maximum of ten years under provisions of the Fair Credit Reporting Act.
Q: How do I get a bankruptcy filing removed from my credit report?
A: The Fair Credit Reporting Act is the law that controls credit-reporting agencies. The law states that credit reporting agencies may not report a bankruptcy case on a person’s credit report after ten years from the date the bankruptcy case is filed. You may contact the Federal Trade Commission, Bureau of Consumer Protection, Education Division, Washington, D.C. 20580; their phone number is (202) 326-2222. That agency can provide further information on reestablishing credit and addressing credit problems. You can also directly contact the credit bureau(s) reporting the information – e.g., Equifax, Experian, and TransUnion.
Q: What can I do if a creditor keeps trying to collect money after I have filed bankruptcy?
A: If a creditor continues to attempt to collect, the Debtor may be entitled to take legal action against the creditor to obtain a specific order from the court prohibiting the creditor from taking further collection action. If the creditor is willfully violating the automatic stay, the Court can hold the creditor in contempt of court and fine the creditor. Emery Kast, PLLC takes these cases on a contingency fee basis and if we do not make a recovery for you there is no charge for our services.
Q: My ex-spouse has filed bankruptcy. He/she has listed me as a co-signer on a scheduled debt. What can I do? Does my divorce decree protect me?
A: If you are a co-debtor with your ex-spouse on a debt, the creditor can require the entire payment of that debt from your share of the marital property, even though the divorce decree assigns the debt to your ex-spouse. Depending on the terms of your divorce decree, you may be able to have certain support obligations determined to be nondischargeable by the bankruptcy court or in state court. The attorneys at Emery Kast, PLLC can give you a thorough explanation of your rights and obligations in this area as soon as you find out that your ex-spouse has filed bankruptcy.
Q: Does my divorce decree protect me from creditors if my ex files for bankruptcy?
A: No. If you're a co-signor with your ex-spouse on a debt acquired while married, the creditor can require the entire payment of that debt from you even though the divorce decree assigns the full debt to your ex-spouse. Your divorce decree may address any recourse you may have against your ex-spouse should he default on the loan obligations.
Q: Can a loan co signor be responsible for a debt if the other person declares bankruptcy?
A: Yes. The lender can require the co-signor to make payments on a loan once the principal has declared bankruptcy on the credit.
Q: What can I keep, if anything, if I file bankruptcy?
A: Exemptions allow an individual to "exempt", or keep, certain kinds of property. In Florida, typical assets that are considered “exempt” include:
Debtors may exempt real or personal property, including a mobile or modular home and condominium, to an unlimited value. Property cannot exceed: 1/2 acre in a municipality, or 160 acres elsewhere. A spouse or child of deceased owner may claim exemption. Tenancies by the entireties in real property are also exempt as to debts of one spouse.
· Prepaid hurricane savings accounts, prepaid medical savings account deposits, and prepaid college education trust deposits.
· Motor vehicle up to $1,000; prescribed health aids; federal income tax credits or refunds.
· 497.56(8) - Pre-need funeral contract deposits.
· Any personal property up to $1,000 total, or up to $4,000 if no homestead claimed.
· For head of family, 100% of earnings up to $750 a week; applies to either unpaid or paid wages, or wages deposited in a bank account for up to 6 months.
· Federal government employees' pension payments that are needed for support and were received up to 3 months prior to the bankruptcy.
· Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans).
· IRAS and Roth IRAs to $1,171,650.
· State officers and employees.
· County officers and employees.
· Police officers.
· ERISA - qualified benefits, IRAs and Roth IRAs.
· Public assistance, unemployment compensation, Veterans' benefits, and social security.
· Workers' compensation.
· Crime victims' compensation unless seeking to discharge debt for treatment of crime related injury.
Alimony and Child Support
· Alimony and child support needed for support.
· Death benefits payable to a specific beneficiary.
· Annuity contract proceeds excluding lottery winnings; life insurance cash surrender value.
· Disability or illness benefits.
· Fraternal benefit society benefits.
Damages to employees for injuries incurred in hazardous occupations.
This list includes the majority of bankruptcy exemptions available in Florida. However, it may not include all exemptions, and states often create exceptions to specific exemptions. Although this information is accurate when published, exemption amounts can change so it is best to check with the attorneys at Emery Kast, PLLC or a bankruptcy attorney of your choosing.
Q: Do you have to have a certain amount of debt to file?
A: No. However, some situations may not warrant filing for bankruptcy. If your financial situation is temporary, you may consider making arrangements with individual creditors for a change in payment amounts or a reduction in the total amount due. If you have little property or money, filing bankruptcy may not be necessary, as the creditor may not be able to collect the debt.
Q: Do I have to file bankruptcy on all the accounts I owe, or can I keep some?
A: You must include all the debts you owe in your petition and schedules. You may opt to keep some debts by "reaffirming" the specific debt.
Q: Will I lose my retirement accounts or payments from social security?
A: Generally, no. Retirement accounts that are ERISA-qualified aren't considered property of an estate and aren't taken into consideration as assets. Social Security benefits are protected from assignment, or garnishment for debts in bankruptcy. Once paid, the benefits continue to be protected only as long as they can be identified as Social Security benefits. For example, money in a bank account where the "only" deposits into the account are direct deposits of Social Security benefits are identifiable and generally protected.
Q: Will I lose my home if I file for bankruptcy?
A: Not necessarily. In Florida, homestead property is usually exempt. However, there are some exceptions:
If you are behind in your mortgage payments or a foreclosure has been filed against you, filing a Chapter 7 will only delay the foreclosure process. Within 30-90 days the mortgage company will file a motion for the court to lift to automatic stay or wait until you receive a discharge and your case is closed (approximately 90 days after filing). If you want to be sure to save your home from foreclosure there are two options.
The first option is to file a Chapter 13 case. In doing so, you will be permitted to commence making your regular monthly payments and have up to five (5) years to cure any arrears. However, your interest rate and the terms of the mortgage will remain the same.
The second option is to file a Chapter 13 case and participate in the Mortgage Modification Mediation program recently initiated through the bankruptcy courts. In most cases, your principal interest and HOA dues will be established at 31% of your gross income on a temporary basis while you go through the modification process. The attorneys at Emery Kast, PLLC have many clients who have received successful modifications which have included principal reductions or deferrals, forgiveness of arrears, late fees and interest, and lower interest rates.
Q: When can I apply for credit again after bankruptcy?
A: The decision whether to grant you credit in the future is strictly up to the creditor and varies from creditor to creditor. There's no law that prevents anyone from extending credit to you immediately after the filing of a bankruptcy, but creditors aren't required to extend you credit.
The exact information in the notice may be slightly different depending on the chapter under which the case is filed.
Q: Can creditors object to a bankruptcy filing or plan?
A: Yes. Bankruptcy filings allow creditors to object to specific debts in the plan or the repayment or cancellation in its entirety.
Chapter 7: Creditors generally have 60 days after the first creditors meeting to object to the discharge of a specific debt. If no objections are filed, the court issues the discharge order, the trustee collects and sells the assets and then distributes the proceeds to the creditors under a predetermined schedule. If there are objections, the bankruptcy proceedings, less the objected debt(s), continues. A trial may be necessary to resolve the objectionable issues.
Chapter 13: Creditors can object to the plan for repayment and the court may take this into consideration. If no objections are filed by creditors or the trustee, the plan may be confirmed as filed.
Q: When should I stop using my credit cards if I'm planning on filing for bankruptcy?
A: As soon as you anticipate filing bankruptcy, stop using your credit cards. Bankruptcy law allows the review of questionable purchases for potential fraud. If purchases are made 40 days prior to filing or cash advances taken within 20 days of filing, the debt may possibly be excluded from the bankruptcy and it can be dismissed.
Q: What's a reaffirmation agreement?
A: Reaffirming a debt is voluntary and isn't required by bankruptcy codes. You may voluntarily repay any debt instead of signing a reaffirmation agreement, but there may be other reasons for wanting to reaffirm a specific debt, such as a vehicle loan.
Q: How's an inheritance treated in a bankruptcy case?
A: How an inheritance is treated in bankruptcy depends on when you become entitled to receive it and what type of bankruptcy relief you're seeking.
Chapter 7 - if you become entitled to an inheritance within 180 days of your filing date, the inheritance will be a part of your bankruptcy estate, and can be used to pay your debts. The important date is when your right to the inheritance is fixed, which is typically on the date of a person's death. You might not receive property or money from someone's estate for many months.
Chapter 13 - your inheritance can be used in determining how much you have available to pay creditors under your repayment plan, and the 180-day limit doesn't apply. In either type of bankruptcy, you must inform the bankruptcy trustee about the inheritance. If you're thinking about filing for bankruptcy, ask an attorney at Emery Kast, PLLC how an expected inheritance might factor into your plans.
Q: Can my wages be garnished for credit card debt?
A: Many debt collectors will threaten to garnish your wages for nonpayment of a debt. Although this is often allowed, there are certain steps the creditor must take before they can do so. First, they must file a lawsuit against you, have you served with a copy of the lawsuit, win the lawsuit and then get permission to garnish your wages from the court. In Florida, there are certain types of people whose wages cannot be garnished, or the amounts are limited.
Q: Can a creditor levy against or freeze my bank account?
A: Yes. Once a creditor obtains a judgment against you, they can apply to levy against your checking or savings account. Your bank, upon receipt of a Writ Of Garnishment from the court, will freeze your account for up to three times of the amount of the judgment. Although there are exemptions under Florida Law, it often takes days or even weeks to get your account restored and access to your money again.
Q: What is the Statute of Limitations on Debt?
A: Debts have sort of an expiration date known as the Statute of Limitations (SOL) that keeps debt collectors, even the original creditor, from pursuing it indefinitely. Before you agree to pay an old debt, first make sure the statute of limitations hasn’t expired. If it has, you might not have to pay.
Debts fall into one of four categories. It is important to known which type of debt you have because the time limits are different for each type. Ask us if you have questions about which type of debt you have.
Oral Agreements are debts which were made in an oral contract. With an oral contract, you only made a verbal agreement to pay back the money. Nothing was in writing. In Florida, the statute of limitations on an oral agreement is four (4) years.
Written Contracts are debts with a contract that was signed by you and the creditor. A contract includes terms and conditions of the loan. In Florida, the statute of limitations on a written contract is five (5) years.
Promissory Notes are written agreements to pay back a debt in certain payments, at a certain interest rate, and by a certain date and time. In Florida, the statute of limitations on a promissory note is five (5) years.
Open-Ended Accounts are accounts with a revolving balance that you can repay and borrow. Credit cards are open-ended accounts. In Florida, the statute of limitations on open-ended accounts is four (4) years.
Q: Will I lose my house if I file bankruptcy?
A: Not necessarily. The first question is whether there is any equity in the house (today’s value less the costs of sale less the payoff balances on all liens). The Trustee will usually abandon the house to you and you can keep it as long as you pay the mortgages. If you are behind in your mortgage payments you may need to file a Chapter 13 to save the home by beginning to make the regular monthly payment again and curing any arrearages over a period of 3-5 years. You may also participate in the Mortgage Modification Mediation Program and possible reduce the interest rate, principal, or even have your arrearages and late fees forgiven as part of the modification.
The second question is if you have equity in the home. If you do and it is your homestead property, it is most likely exempt, with some exceptions.
Q: Can I strip liens (second mortgages) from the property?
A: One of the advantages to filing chapter 13 bankruptcy is the ability to strip an “under secured” junior mortgage lien. When a homeowner owes more on their mortgage than their home is worth, Chapter 13 allows junior mortgages to be removed or “stripped”. Whether you can strip a second mortgage or lien from your property depends on the value of the home and how much you owe.
Q: Is the IRS affected by my bankruptcy filing?
A: The IRS must stop collection actions after a bankruptcy is filed just like other creditors. The automatic stay protects the Debtor and the Debtor’s property. However, whether the tax claim is dischargeable depends on many variables. If you have tax debt you need to speak with an attorney at Emery Kast, PLLC or another legal or tax professional.
Q: Can the Trustee take my car?
A: If there is no equity in the car, after subtracting any car loan and exemption from the car’s present sale value, the bankruptcy trustee will not take the car. If there is equity in the car over and above the value of the exemptions available, a Debtor can usually buy any unprotected equity from the Chapter 7 Trustee. If the Debtor is in a Chapter 13 and has equity in the car over and above the value of the exemptions available, a Debtor can still keep the car but must pay the amount of equity above the exemptions to the Debtor’s creditors over a 3-5 year period.
Q: Can a creditor take the car?
A: If you still owe money on the car, you can choose to reaffirm the debt to the secured lender, keep the car, and continue paying under the existing terms; or you can buy the car from the secured creditor in a single payment for its present value (redemption). Or, if you choose, you can surrender the car and be free of any obligation to pay for it.
Q: Can I discharge my student loans in bankruptcy?
A: Student loans are no longer dischargeable in any chapter of bankruptcy unless you can prove that repaying the loan creates an undue hardship on you or your family. Proving hardship usually requires showing that you can’t provide a minimum standard of living for yourself and your dependents if you have to repay the loan. Some courts will discharge part of the loan on a showing that repaying it all would be a hardship, however, it is extremely rare that they do.
Student loans are sometimes unenforceable due to school closures, fraud, etc. Chapter 13 can provide a way to cure defaults on student loans, or to pay them off over the course of the plan.
Q: Can I put my assets in someone else’s name before filing?
A: No. Such transfers are not effective to put your assets beyond the reach of creditors and bankruptcy trustees. Worse, such action may lead to the denial of your discharge which is usually the whole point of filing bankruptcy. Bankruptcy courts have powers that other courts don’t have, including the power to break contracts and cancel debts. The court also has the power to take back transfers made within the past two (2) years that it considers fraudulent. The Bankruptcy Code provides that the court may avoid any transfer of a Debtor’s property that was made within two (2) years, if the Debtor voluntarily or involuntarily received less than a reasonably equivalent value in exchange, was insolvent on the date of such transfer.
Q: What is the automatic stay?
A: After filing for bankruptcy an automatic stay may be put into place, and usually is with a few exceptions. If it does, it will automatically stop all attempts by creditors to collect on debts, including existing lawsuits, car repossessions, and wage garnishments.
There are exceptions to automatic stay protection. These exceptions include criminal prosecution, paternity proceedings, litigation to collect child support or alimony, repaying a loan from certain types of pensions, and IRS audits. Another possible exception is with residential real estate leases. A landlord can file for eviction after the bankruptcy is filed based on endangerment of property or use of illegal substances on the leased premises. Also, the automatic stay does not stop or postpone actions to suspend driver’s licenses and revoke professional licenses related to a prosecution by a governmental unit such as the state attorney general’s office.
Q: How long will the automatic stay remain in effect?
A: Generally, an automatic stay will remain in effect for the duration of the bankruptcy with one exception. If you filed for bankruptcy at any time during the year prior to the current filing and had that case dismissed before completion, an automatic stay on the current filing will only last 30 days. This is designed to prevent people from taking advantage of the system (i.e. to stop people who don’t really intend to file bankruptcy but who are simply using the automatic stay for protection).
In some cases a creditor can request that the judge lift the automatic stay for them, meaning that that creditor would be legally allowed to pursue the debts they are owed. This can only be done with good reason by a judge’s order. This normally only happens when a Debtor is surrendering property or an automobile in the bankruptcy. If the stay is lifted and a Debtor receives a discharge, the underlying debt is still forgiven and only the secured collateral will be lost.
Q: What is the means test?
A: When filing for bankruptcy, a Debtor must submit to a means test which is a formula created by Congress to help the court determine whether they are eligible for either Chapter 7 or Chapter 13 bankruptcy. Those with the smallest means qualify for Chapter 7 in which all of the filer's debts are written off, and do not have to be repaid. Those with greater means qualify for Chapter 13, and must repay some portion of their debts. The means test is a complicated process and many of our clients find it difficult to calculate alone. We are here to help you!
To take the means test, you must first determine whether your income is more or less than the median income in your state. This is calculated by taking your gross income for the prior six (6) months to the expected filing date and subtracting allowed expenses (i.e. taxes, insurance, secured debt payments, utilities, etc.) If you do not earn more than the median income for a household of your size in your state, you pass and need to nothing more.
In the event your income exceeds the state median, you must complete the means test computations which get significantly more complex. You must determine whether you have enough income left over (called “disposable income”), after paying your “allowed” monthly expenses, to pay off at least a portion of your unsecured debts (such as credit card bills). If your disposable income adds up to more than a certain amount, you fail the means test and cannot file for Chapter 7 bankruptcy.
Median income levels vary by state and household size, and each county and metropolitan region has different allowed amounts for categories of expenses: basic necessities, housing, and transportation. For your convenience, we have provided an online calculator for you HERE.
If you pass the means test, it does not necessarily mean you should file for Chapter 7 bankruptcy, merely that you can. There are many other reasons to file a Chapter 13 case. Please call Emery Kast PLLC for a free consultation to learn more.
Q: Does the means test apply to everyone?
A: No. Under certain circumstances, the means test does not apply to disabled veterans. A veteran may circumvent the means test if the following conditions apply: the debt was incurred while serving on active duty or while serving in homeland defense activities, the veteran has a disability rating of at least 30 percent, and the veteran acquired more than half of the debt while on active duty or serving in homeland defense. Also, a Debtor whose debt is primary business debt is not subject to the means test.
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